12th Nov 2014 09:01
LONDON (Alliance News) - Centamin PLC Wednesday said its pretax profit fell during the third quarter due to a weaker gold price hitting its revenue and a significant increase in costs.
The company's pretax profit fell sharply during the third quarter ended September 30, totalling USD15.8 million compared to a USD29.7 million profit in the third quarter of 2013. The decrease is due to a slight drop in revenue and an increase in cost of sales, alongside a weaker gold price compared to 2013.
During the third quarter, the company reported revenue of USD116.2 million, down from a year earlier when it generated USD120.1 million. Its cost of sales during the period rose 28% and reached USD94.0 million, considerably higher than the USD73.3 million spent in the third quarter of 2013 when revenue was higher.
Revenue decreased due to the company's 1% increase in gold sales rising to 91,575 ounces from 90,341 ounces, being offset by a 5% reduction in the average gold price of USD1,267, from the USD1,329 per ounce achieved in 2013.
Centamin's cost of sales increase was the result of a 22% increase in mine production costs to USD72 million due to increased activity and a 63% increase in depreciation and amortization to USD22.1 million, said the company in a statement.
Gold production in the third quarter rose 10% to 93,624 ounces, compared to 84,757 ounces of gold a year earlier. Accompanied by a lower gold price, its cash costs rose to USD771 per ounce from USD693 per ounce in the third quarter of 2013.
Compared to the second quarter, production increased and costs reduced, producing 81,281 ounces of gold at a cash cost of USD783 per ounce in the previous quarter.
All of the company's revenue during the quarter came from the Sukari mine in Egypt. The process plant at the mine expanded its capacity to 10 million tonnes per year in September and recorded a record throughout of 2.4 million tonnes during the quarter. Further underground drilling is also under-way at the project in an attempt to expand the project's mineral resource, said Centamin.
Centamin's production guidance for the full year has been revised down to between 370,000 and 380,000 ounces ,due to the grade reducing and lower plant activity in October, and Centamin said it aims to reduce the average cash cost for the year to USD700 per ounce.
"The operation remains relatively low cost with expected 2014 cash operating costs of USD700 per ounce and with capital expenditure for the Stage 4 expansion programme now complete, Sukari remains set to deliver substantial free cash flows for the remainder of the mine life. We therefore remain on track to further consolidate our position as a significant mid-tier gold company," he added.
Centamin shares were down 1.1% to 50.03 pence per share Wednesday morning.
At the end of the period, Centamin reported a cash balance of USD109.9 million.
By Joshua Warner; [email protected]; @JoshAlliance
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